New Year's resolution for George: walk it like you talk it

One might forgive George Osborne if he has not yet got round to making any resolutions for 2011: after what must surely have been the most momentous year of his life, he is due a bit of a breather.

The most important resolution for Mr Osborne might be expressed this way: don't be afraid to admit you've made a mistake. It is too early to say yet whether the gamble the Chancellor is taking with the recovery, by pushing ahead so aggressively with deficit reduction, will pay off. But by the middle of the year, we will have a better idea of just what spending cuts and tax rises are doing to growth and unemployment. And if the recovery is undershooting the modest forecasts made by the Office of Budget Responsibility, there is no shame in changing tack.

In the short term, the Chancellor should at least consider delaying the VAT rise that is due to take effect on Tuesday - even if it is only for a month or so. The retail sector had been expecting a bumper run-up to Christmas, with consumers rushing to beat the VAT increase. The weather put paid to that idea. And while the early evidence from the sales is that the tills are now finally ringing, the high street deserves a chance to recover from December's big freeze.

So far, we've seen plenty of talk from the Chancellor, but not nearly so much action. Mr Osborne's treatment of the banks is a good example. For all the rhetoric concerning cracking down on excess and ensuring that the City pays its way, the cost to the banks of the financial levy the Chancellor has unveiled will be met by his corporation tax rate cut.

Also key this year is the question of whether the Chancellor is really serious about boosting British manufacturing. Though Mr Osborne has repeatedly talked of rebalancing the economy, what is he doing about it? The abolition of investment allowances, to pay for the corporation tax cut, hit manufacturers disproportionately hard. The withdrawal of the loan pledge to Sheffield Forgemasters also sent the wrong message. This is the year to make amends.

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